SunAdvantage

Health Spending Account

Administration guide
 SunAdvantage HSA Administration Guide Sun Life Financial

Contents
Introduction .......................................................................................................................................................... 1
About this guide........................................................................................................................................................................1
Member recordkeeping ................................................................................................................................... 2
Adding a member......................................................................................................................................................................2
Sending us member data.......................................................................................................................................................2
Allotments ............................................................................................................................................................. 3
Establishing each year’s HSA allotment amounts ....................................................................................................3
Changes to allotments...........................................................................................................................................................3
Pro-rating allotments..............................................................................................................................................................3
Claiming under an HSA..................................................................................................................................... 4
About submitting HSA claims.............................................................................................................................................4
Your HSA Invoice................................................................................................................................................ 6

Group Benefits are provided by Sun Life Assurance Company of Canada,

a member of the Sun Life Financial group of companies.

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 SunAdvantage HSA Administration Guide Sun Life Financial

Introduction
Your Health Spending Account is a great way to inject flexibility and choice into your benefits plan, and
expand the types of expenses your plan covers at a cost that can be defined and managed. Any expense
that qualifies as a medical expense under the Canadian Income Tax Act can qualify for coverage under
an HSA. Plan members can use their HSAs to pay for deductibles, co-insurance (the percentage the
member must pay if the plan covers less than 100 per cent) and amounts above the coverage limits.
HSAs also cover a wider range of dependents than health and dental benefits. In addition to a spouse
and children, plan members can also claim expenses for extended family members, as long as they
qualify as dependents under the Canadian Income Tax Act. To verify eligibility information or eligible
expenses please be sure to visit the Canada Revenue Agency Website for details. Go to www.cra-
arc.gc.ca and enter Medical Expense Tax Credits in the search window. Go to the most current version
of publication #IT519 (Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction).

About this guide

This guide is designed to help you administer your Health Spending Account (HSA). It should be used in
conjunction with the following (if applicable to your plan):

• Administration Guide, which outlines the general administrative processes for your benefits plan.
• Plan Sponsor Services User Guide, if you use our Plan Sponsor Services Website to administer your
benefits.
If you have a question this guide can’t answer, or if you need help administering your HSA, please call
your Sun Life Financial Group Client Services administration contact.

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Member recordkeeping
Adding a member
If you are adding a new member who has an HSA, you will need to send us their enrolment and HSA
allotment information (the amount to be credited to their account) when you next update your plan
member records. We cannot pay claims for the plan member or dependents until we receive that
information.

Sending us member data

• If you use our Plan Sponsor Services (PSS) Website for administration
• Allotments are made annually, and the member joins at the beginning of the benefit year,
enter 1/12 of the annual amount on the benefit selection portion of the Add a member
screen. PSS uses the monthly amount to calculate the full-year allotment. The full-year
allotment will be available to the member as of their benefit effective date.

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Allotments
According to Canada Revenue Agency (CRA) guidelines, HSA allotments must be decided before the
start of the benefit year.

Establishing each year’s HSA allotment amounts

At the beginning of each benefit year, you must provide us with allotment amounts for all members for
the new year – even if the amounts are the same as what was allotted for the previous year. (See
instructions under Sending us member data in the Member recordkeeping section.)
Please be sure to send us annual updates well enough in advance to allow us time to update our records
prior to the new benefit year. A delay in submitting update information may result in claims being
declined incorrectly.

Changes to allotments
Canada Revenue Agency (CRA) guidelines allow changes to HSA allotments as the result of a life event
(e.g. marriage, becoming a parent, loss of spouse’s coverage) or change in employment status (e.g.
moving from part-time to full-time status). You can choose whether your plan allows changes at the
time of a life event or employment status change, or if the member must wait until the next benefit year
to make the change. CRA does not allow changes to be retroactive. They can only be effective from the
date of the life event or employment status change.
HSA credits cannot be withdrawn from the member's account once they have been deposited.
If your plan allows changes as the result of a life event or employment status change, consult with your
benefits consultant and company tax advisor to ensure any changes you make meet CRA requirements.

Pro-rating allotments
If the member’s coverage starts after the benefit year begins, the credits are adjusted based on the
number of months remaining in that benefit year.

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Claiming under an HSA

Members can submit HSA claims online using our convenient Plan Member Services Website, (provided
your plan has a Pay-Direct Drug card),or by mail. Your members’ HSAs are fully integrated within our
claim payment system to allow for seamless, efficient claims handling. That means members can:
• Submit a combined claim under their Extended Health Care plan and HSA (or their Dental Care plan
and HSA) using one handy claim form, and receive one combined payment for both claim portions.
• Receive a combined claim statement showing how their Extended Health Care or Dental Care claim
plus their HSA claim were calculated, and showing their remaining HSA balance.
• Check their HSA account activity and balance, along with their other claims information, using our
Plan Member Services Website.

About submitting HSA claims

If a member is covered for a portion of their expense under their Extended Health Care or Dental Care
benefits, they should be sure to submit their expenses to that plan before claiming the balance from
their HSA.
Likewise, if a member has coverage under their spouse’s plan, it is to their advantage to claim the
balance of their expense under that other plan first before claiming under their HSA – although this is
not a requirement. If a member’s plan and their spouse’s plan are both administered by Sun Life Financial
Group Benefits, we can automatically coordinate claims for them. They simply complete the required
information on our claim form, and we’ll do the rest.
Not all HSA claims can be submitted online, even though they may be eligible HSA expenses:
• When online, members will be asked to select their type of expense from a drop-down list. If
their expense type is not on the list, they will have to submit a paper claim.
• HSA claims over $1,000 cannot be submitted online.
When members submit claims online, they must keep their original receipts for 12 months. We
randomly audit Web-based claims regularly to ensure they are valid and accurate. If a member’s claim is
chosen for audit, we will ask them to mail us the original receipt.
When members use their drug card or their dentist submits their claims electronically, the balance of the
expense is not automatically processed through their HSA. They will have to submit a separate claim to
their HSA, either online or using a paper form, for the unpaid portion of the claim.

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Carry-forward provisions
Canada Revenue Agency requires that HSA allotments only remain available to plan members for a
certain period of time. At the end of that time, the member forfeits any remaining balance. (Members
cannot withdraw HSA amounts as cash.) CRA allows a one-year “carry-forward” feature, if plan sponsors
choose to include it in their plan design.
Here’s how the carry-forward feature works:
Balance carry-forward feature:
Members have a ‘proof of claim period’ after the end of a benefit year to claim expenses that were
incurred during that year. After the proof of claim period, they can no longer submit claims for the
previous year’s expenses.
If members have unused HSA allotments remaining in their accounts at the end of the benefit year, they
can carry them over to use along with their next year’s allotment to pay for next year’s expenses. (Next
year’s claims would be paid first from the carried-over allotment, before using the new allotment.)
Each year’s allotment can only be carried over for one year. At the end of that second year’s proof of
claim period, any carried-over allotments still remaining from the first year are lost.
Here’s an example of how the balance carry-forward feature works.

Activity Activity date Transaction HSA balance

amount
Credit deposit Jan. 1, 2005 $300 $300
(Year 1)
Claim #1 Feb. 1, 2005 $20 $280
Claim #2 Nov. 1, 2005 $20 $260
Year-end balance Dec. 31, 2005 $260 (unused amount can be
carried forward for use in
2006)
Credit deposit Jan. 1, 2006 $300 $560 ($260 from 2005,
(Year 2) $300 new credits)
Claim #1 Oct. 1, 2006 $40 $520
Year-end balance Dec. 31, 2006 Unused $220 from $300 (can be carried-
2005 is lost forward to use for 2006
expenses)
Credit deposit Jan. 1, 2007 $300 $600 ($300 from 2006
(Year 3) plus $300 new credits)

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Your HSA Invoice

• Monthly in arrears. Each month, we provide you with your Health Spending Account Invoice
showing the HSA claims we have paid for that month, plus our expense charges, interest fees and
applicable taxes.
• Please note: Your HSA Invoice and Group Benefits bill will remain separate and be sent separately
each month.

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